Amazon Q1 Results: Loss of $4.83 billion, First-time Loss in Last 7 Years

Amazon posted a loss for the first time since 2015. The company registered a loss of $3.84 billion due to slowdown in online shopping and loss through an investment

Insights about the Quarter Results

Lower revenue growth: Dragged by a slump in online shopping, the Seattle-based online retail giant reported poor revenue growth for the March quarter of fiscal 2022. The company posted total revenue of $116.45 billion, which is only a 7.3% increase as compared to the $108.51 billion of the same period last year. Unlike the March quarter of fiscal 2021, revenue generation from the sale of services outweighs sale of products this time. The proceeds from product sales are reported at $56.45 billion, a drop of around 1.8% from the same quarter last year. 

Posted loss: Lower revenue growth also resulted in a loss for the first time since 2015. Amazon registered a loss of $3.84 billion in the March quarter of 2022 against $8.11 billion profit in the same period last year. This translates into a negative earning per share of $7.56. The loss for the quarter expands further to $3.84 billion (comprehensive loss) if elements like foreign currency translation adjustments, net change in unrealized gain/loss, other expenses, etc., are factored in. 

Income (loss) from product sales in different regions: The net sale proceeds from North America stand at $69.24 billion, which is around a 7.5% increase over the previous year. However, the company spent $70.81 billion as operating expenses, which when factored in with the revenue, results in a net loss of $1.5 billion. The story is the same with the company’s international business in which the loss is $1.28 billion. 

Higher operating income from AWS: Amazon generated a revenue of $18.44 billion from selling its web services, known as Amazon Web Services (AWS). The same generated an operating income of $6.51 billion, which is over 56% increase as compared to $4.16 billion of the last year. The margin generated from AWS helped contain the loss. The weightage of revenue from AWS in the total revenue also increased to over 15% in this quarter from 12% in the same quarter of the previous year.

Investment write-off: The cardinal reason behind such red marks over the financial report is the $7.6 billion decline in the value of Amazon’s investment in Rivian Automotive. After going public in 2021, Rivian Automotive, an American EV maker, has lost around 68% in its market cap until now. The shares were trading near $180 when the company went public in 2021, which now has declined to $32.1. 

Outlook for Q2: Amazon forecasts net sales to be in-between $116.0 billion and $121.0 billion for Q2 2022, or 3% and 7% respectively. The company expects the next quarter’s operating income to be somewhere in the range of -$1 billion and $3 billion. 

Amazon stock tanked over 9% after hours of trading post quarterly results. It declined further on Thursday to close at $2485.63.